Travel Planners International (No. 31 on Travel Weekly's Power List) will jump into the travel agency franchise business with a new brand, Vacation Planners, and industry consultant Robert Joselyn said it serves a need.
"We all know that the independent contractor market has exploded," said Joselyn, CEO of Joselyn Consulting Group. "Is there a need among them to have business skills to run their independent contractor business in a more businesslike way? The answer is probably yes."
A franchiser, he noted, offers more business-level support than most hosts.
"Basically what you're buying is a proven business," he said of a franchise. "The way I've always phrased it is, add water, put it in the oven and bake for an hour and 20 minutes at 400 degrees, and you've got a business. It's a business plan, it's a business package, and you're buying into that."
He added that a franchise model is often a good fit for an IC who wants to be a better businessperson but also "tied to a mother ship somehow."
Joselyn also sees benefit to Travel Planners in the creation of Vacation Planners.
Agent loyalty is a common problem among host agencies. Asking advisors to buy into a franchise will likely create more "stickiness," he said, especially because the franchise model bundles support in areas where advisors may have little interest, like tax filings and insurance. It also gives the franchiser more control over how the agency does business; that kind of control cannot be exerted over an IC by a host agency.
Despite the many benefits of franchising, Joselyn also said that, in general, it is "a tough business." Potential owners must weigh the investment they need to make in the franchise compared to what they will get in return, he said, adding that agencies already operate on thin margins.
Franchise buy-in costs will vary
Vacation Planners will join a small group of home-based travel agency franchisers: Dream Vacations/CruiseOne and Cruise Planners. While there are few home-based franchisers, there are other franchisers with more traditional models like Expedia Cruises, Travel Leaders Network and BCD, which tend to have higher buy-in costs.
Notably, American Express shuttered its representative network of franchises at the end of 2022.
Conversely, the year prior, Dream Vacations doubled down on its franchise business, shuttering host agency brand Cruises Inc. and encouraging those ICs to purchase their own Dream Vacations franchise or affiliate under an existing franchisee.
Jenn Lee, who will lead Vacation Planners as its president, said she believes one of the franchiser's biggest differentiators will be its relationship to Travel Planners.
Vacation Planners will already have an established back-office system; resources at Travel Planners like the accounting and agent support teams will operate as crossover departments; and Vacation Planners franchisees will sell under Travel Planners' IATA number and earn top commissions with preferred suppliers.
"We get to tap into the services already well established at TPI," Lee said. "And because of that, we're not going to have to charge the high royalty fees a lot of the franchisers charge."
Lee, who is transitioning from her role as Travel Planners' vice president of industry engagement and support (with those responsibilities rolling over to Dave Meihoefer, the newly named vice president of sales and engagement), identified four main targets as potential franchise owners.
The first is new-to-industry advisors who want to open a franchise. They will have the highest buy-in costs for a Vacation Planners franchise.
The second target is existing Travel Planners owners who will be able to buy a franchise at a reduced price because they are already familiar with TPI's systems.
Third is experienced advisors outside of Travel Planners who are interested in a franchise. They might be advisors who haven't found much success with their own branding and marketing, she said, and would rather spend more time selling and serving their clients. Their buy-in costs will also be lower than for those who are new to the industry.
The fourth group is the one Lee said she is most excited about: agency owners looking to leave the industry. Succession planning is an area Lee has identified as a friction point in the agency community.
Oftentimes, she said, owners are reluctant to sell their agency if they aren't confident in the purchaser's ability to represent their legacy of customer service. There will be an avenue for them to sell to Vacation Planners, which, in turn, will pocket list the agency to its network of franchisees. The agency being sold will be matched with franchisees with similar services and products.
"They're selling knowing that there is a solid culture and support and requirements for the Vacation Planners franchisee to adhere to so that the agency owner feels confident to hand their business over to someone else," Lee said.